SEBI Upholds Security Market Ban On Gensol’s Jaggi Brothers

About three months after issuing an interim order in the case of alleged financial misappropriation by promoters of Gensol Engineering – Anmol Singh Jaggi and Puneet Singh Jaggi, markets regulator SEBI has upheld its interim findings in the case as well as directions. 

With this, SEBI has upheld its interim direction barring the brothers from holding the position of director or key managerial personnel of the troubled company, which is a related entity of ride-hailing startup BluSmart.

The interim order triggered a crisis for Gensol, which is under bankruptcy proceedings. BluSmart, too, is undergoing insolvency proceedings now. 

SEBI’s interim order in case of Gensol alleged the following issues: 

• Default on debt
• Making misleading corporate disclosures
• Flouting related party transaction norms
• Manipulating credit rating agencies
• Diversion of funds by the promoters
• Inflating Gensol’s stock price

You can read more about the red flags that took down Gensol and BluSmart here. 

After SEBI released the interim order on April 15, Gensol unsuccessfully moved the SAT, filing a plea on May 7. The plea was disposed of due to no further response from Gensol in subsequent hearings. 

During the SAT hearings, the Jaggi brothers said that SEBI’s observations were “unfounded, vague and devoid of merit”. They also contested the findings of borrowings from IREDA and PFC and fund transfers to Gensol’s affiliate Wellray. 

In its confirmatory order, SEBI said Anmol Jaggi denied every allegation made by it. However, most of these denials came without material evidence, which cannot be accepted as a credible explanation, the regulator said. 

On the allegations of misleading corporate disclosures, the regulator recused itself from making negative inferences till the respective investigating authority examines the aspects and genuineness of Gensol’s claims.

It is pertinent to mention that during the SAT hearings, Puneet Jaggi argued that he was  Gensol’s director for name’s sake and was involved in another venture in Bengaluru. Puneet also made a similar claim in the Delhi HC at the end of April, while seeking anticipatory bail amid fears that Delhi Police’s economic offences wing (EOW) might arrest him. 

The SEBI rejected this claim. “As Puneet Singh Jaggi appears to also be a direct beneficiary of funds diverted from Gensol through Wellray, his contention that he was not involved in the affairs of Gensol cannot be taken at face value. Accordingly, I am not inclined to accept the submissions of Puneet Singh Jaggi at this stage,” the order read.